Technology and Imperfect competition

Technology and Imperfect competition

Technology and imperfect competition.

Ideas are nonrivalous in nature which leads to imperfect competition with increasing returns .
As ideas are nonrivalours ,means once they produce it usage by one doesn’t effects the other one and are partially excludable,means once the ideas are produced it can be used by others also .
As ideas are nonrivalours ,to produce ideas once ,it requires the fixed cost and other are the dublication so production function where it the goods have fixed cost and constant marginal cost .
In perfect competition price is equals to marginal cost there is efficiency ,but in imperfect competition price is greater than marginal cost,is it efficient ?
The answer is yes , because in perfect competition firm earn normal profit ,but in imperfect competition firms earn profit and thus take initiative to produce ideas with this profit because ideas require fixed cost to produce once .Thus if firm will not earn the extra profit ,it will not take any initiative to produce ideas and there will be no technological progress and the economy will be stagnant and backward .
Thus imperfect competition is necessary to boost technological progress and for the development of the economy.

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Ricardian equivalence

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